On the Sustainability of a Monetary Union under External Shocks: a Theoretical Result and Its Application to the Gulf Countries

Etienne Farvaque and Norimichi Matsueda

No 66, Discussion Paper Series from School of Economics, Kwansei Gakuin University

Abstract: External shocks, be they political or economic, can pose a significant threat to the sustainability of a monetary union. This paper focuses on the openness of a monetary union, and examines how the degrees and characteristics of the sensitivities of its member nations towards external shocks affect the sustainability of the commitment which each of its members made when joining the union. Furthermore, we discuss the sustainability of the prospective monetary union among the Gulf Cooperation Council countries in the light of obtained insights.

Keywords: Monetary Union; Optimum Currency Areas; External Shocks; Gulf Cooperation Council (search for similar items in EconPapers)
JEL-codes: E58 E61 F33 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2010-12, Revised 2010-12
New Economics Papers: this item is included in nep-ara, nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:kgu:wpaper:66

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